Monday, August 31, 2015

On Thursday, August 27, 2015, the Health Resources and Services Administration (“HRSA”) issued a copy of the much anticipated Proposed Guidance for manufacturers and Covered Entities (“CEs”) regarding the 340B/PHS Program. A summary of the most important points for pharmaceutical manufacturers is below but as always, I strongly recommend a thorough review by each organization to determine what issues affect your organization. Comments are due October 27, 2015.340B Program Eligibility and Registration
The Proposed Guidance details the eligibility for hospital and non-hospital sites, as well as “parent” and “child” sites and the effect when an associated facility loses its eligibility. It also goes on to allow three exceptions to the GPO Prohibition for DSH hospitals, children’s hospitals, and free standing cancer hospitals:

1. An off-site outpatient clinic of a 340B hospital that does not participate in the 340B Program itself and purchases drugs through a separate account from the 340B hospital;
2. A GPO-purchased drug provided to an inpatient who, upon subsequent review, results in the designation of that patient as an outpatient for payment purposes; or
3. A hospital which can only access a covered outpatient drug through a GPO contract and has documented its attempts to purchase the drug at the 340B price and WAC, and has notified HHS of its attempts.Drugs Eligible for Purchase Through the 340B Program
The 340B Program has used the definition of, “Covered Outpatient Drugs” based on the Medicaid Drug Rebate Program and excludes those drugs that are reimbursed as part of an associated service, regardless of the payer. With the Proposed Guidance, this limiting definition would apply only to those products when the payer is Medicaid.

Individuals Eligible to Receive 340B Drugs (Patient Definition)
With the Proposed Guidance, the requirements for individuals who are eligible to receive 340B drugs are stricter. To be considered an eligible patient, all of the criteria listed below must be met:

1. The patient receives a health care service at a CE site;
2. The health care service is from a provider employed by the CE or who is an independent contractor of the CE “such that the CE may bill for services on behalf of the provider;”
3. The patient receives a drug that is ordered or prescribed by the provider as a result of the service described in 2. above, but not if the only health care received is the infusion or dispensing of a drug;
4. The patient receives a service that is consistent with the CE’s scope of grant, project, or contract;
5. The patient is considered an “outpatient” when the drug is ordered or prescribed. However, patients who are self-pay, uninsured, or whose cost of care is provided by the CE will be considered an patient if the CE has clearly defined policies and procedures that it follows to classify these patients consistently;
6. The individual has a relationship with the CE, auditable health care records are maintained that demonstrate the provider-to-patient relationship, the CE has a responsibility of care, and that “each element of this patient definition in this section is met for each 340B drug.”

One exception to the patient definition is for AIDS Drug Assistance Programs (“ADAPs”) which considers patients as any individual enrolled in a Ryan White HIV/ADAP funded by Title XXVI of the PHS Act. A second exception is in the case of a public health emergency.

CE Requirements
CEs are already prohibited from receiving duplicate discounts from manufacturers (when a state obtains a rebate on a drug that was also purchased at the discounted 340B rate). The Proposed Guidance would expand the Medicaid exclusion file currently in use to include Medicaid Managed Care Organization (“MCO”) patients. However, CEs would be able to make this determination by location as well as MCO and could make a different election than the Medicaid Fee for Service patients.

CEs would also continue to be able to use a “replenishment model” for their purchases as long as they maintain auditable records.

Contract Pharmacy Arrangements
Currently CEs may enter into an agreement with an unlimited number of contract pharmacies and the Proposed Guidance does not change this. It does require CEs to, “conduct quarterly reviews and annual independent audits of each contract pharmacy location…” placing the responsibility for program compliance with the CE.

Manufacturer Responsibilities
Manufacturers must enter into an agreement (Pharmaceutical Pricing Agreement, or “PPA”) to participate in the 340B Program. The PPA is expected to be revised to include requirements of the Affordable Care Act but no mention is made of these changes. The Proposed Guidance includes a “must offer” provision that would require manufacturers to submit to HRSA a “limited distribution plan” if a product is distributed through, “a specialty pharmacy or a restricted distribution network, or needing to limit distribution due to potential or actual shortages.” There’s no criteria listed as to when this would be required so all products that are distributed through specialty pharmacies might qualify.

In the event that a manufacturer overcharges a CE, regardless of the reason, the manufacturer will be expected to refund the difference within 90 days of this determination and must notify HHS. Refunds must be calculated by NDC and manufacturers would not be allowed to aggregate purchases, offset undercharges nor could they exclude de minimis amounts. In the event that a CE does accept a direct repayment amount within 90 days of receipt, the CE has in effect waived its right to the repayment.

The Proposed Guidance also includes a provision that manufacturers review and update their 340B database on an annual basis.

Rebate Option for AIDS Drug Assistance Programs
ADAPs can access the 340B price through a rebate or through the 340B contract. Most choose the rebate option which would be allowed to continue along with a “hybrid” model for those ADAPs that act as a secondary payer for patients. For ADAPs receiving rebates, the following is required:

1. The ADAP must indicate that it will participate in the rebate or hybrid option;
2. The ADAP is expected to make a “qualified payment” for an eligible patient; and
3. The ADAP is expected to submit claims level detail to the manufacturer with a rebate request.

A “qualified payment” is defined as either a direct purchase of a covered outpatient drug by the ADAP at a price greater than the 340B ceiling price, or a payment by the ADAP for the client’s health insurance premium, copayment, coinsurance, or deductible.

As with other CEs, an ADAP is not allowed to receive a duplicate discount.

Program Integrity
The Proposed Guidance reiterates the previous guidance issued that manufacturers may audit CEs if there is “reasonable cause” and the manufacturer and CE cannot resolve the issue. An audit plan must be submitted to HHS and an “independent certified public accountant” must be used to perform the audit.

For all participants in the 340B Program, all documentation and supporting records would be required to be retained for five years.

It’s important to note that this is “Proposed Guidance” and not a “Proposed Rule” and there is no clear indication as to the enforceability of these items. When HRSA issued the orphan drug rule, PhRMA challenged their ability to impose requirements based on solely on interpretation. We are awaiting a decision in that case which may help clarify how stakeholders are to interpret this Proposed Guidance. As with all things GP-related, it is important that each manufacturer determine what is best and appropriate for their organization.

If you would like more information or assistance in developing comments for submission before the October 27 deadline, please reach out to me. And I look forward to seeing you in Chicago at MDRP where I’m sure we’ll have a great discussion about this topic! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6466, K.Lapins@GP-Specialists.com.

Katie Lapins

Katie Lapins has worked in the pharmaceutical and medical device industries in the areas of commercial and government contracting, compliance, finance and sales operations for 15 years. As a consultant, Katie’s areas of primary focus are government programs, corporate compliance and commercial operations. Within these areas, she has developed policies and procedures, assisted manufacturers with voluntary disclosures/restatements, led audits and assessments, calculated and submitted statutory pricing requirements (AMP, BP, ASP, Non-FAMP, PHS and TRICARE), processed Medicaid/ SPAP/ Supplemental invoices, validated PHS eligibility, handled Class of Trade projects with over 100K entities, and created training for onsite and web-based instruction for 2 – 200 employees. Katie’s experience within the industry includes government contract administration, pricing analysis, commercial operations, specialty pharmaceutical distribution agreements and commercial contract management.

Zoom Wants Health Care to Be More Like Visiting An Apple Store
In 2006, Dave Sanders, a Portland Oregon-based M.D., co-founded a network of walk-in clinics called Zoomcare to offer exactly that. Zoomcare wasn’t exactly Uber-esque, but it was like Starbucks or Chipotle: convenient, consistent, and affordable without coming off as "cheap." After successfully expanding into Vancouver and Seattle, Zoomcare’s creators decided to take a shot at expanding this "user experience" to more than just basic preventive care.

Thursday, August 20, 2015

Guest Author: Katie Lapins
Keeping track of all of the reporting requirements associated with Government Pricing can be daunting. Is your product a brand, authorized generic, generic, injectable or otherwise administered in a clinic or doctor’s office? Not only are these important questions that dictate what reporting must be done on a monthly, quarterly, and/or annual basis, but manufacturers must also comply with various state reporting requirements, currently New Mexico (Q3 only), Vermont (Quarterly) and Texas (Monthly and Quarterly). Here’s a review of the current state reporting requirements:

New Mexico originally required quarterly reporting but this has changed to just the third quarter of each year, due by January 15 of the following year. New Mexico requires the following information for all Covered Outpatient Drugs from all manufacturers:

- Quarterly Average Manufacturer Price (“AMP”),

- Greatest wholesaler prompt pay discount percentage,

- Lowest indirect price through a New Mexico wholesaler, and

- Lowest prices to wholesalers, Pharmacy Benefits Managers and any other New Mexico entity that purchases directly from the manufacturer without the use of a wholesaler.

Vermont requires quarterly reporting within 30 days of the quarter end (January 30, May 1, August 1, and November 1). AMP and BP, if applicable, must be reported for each Covered Outpatient Drug. Additionally, manufacturers must report the undiscounted price paid by Vermont wholesalers for product received in Vermont during the quarter (the Vermont WAC). Vermont also requests that each manufacturer provide the methodology utilized to perform the calculations. For manufacturers, it may be worth including a note as to the confidentiality and proprietary nature of their methodology that is submitted.

Texas has two different reporting requirements. The first is simply that manufacturers must submit AMP on a quarterly basis. The second requirement is due by the 10th day of each month and must include the following information:

- Direct Price to Chain Pharmacy

- Direct Price to Long Term Care (“LTC”) Pharmacy

- Direct Price to Pharmacy

- Price to Wholesaler/Distributor

In the event a manufacturer reports a price range for these price points, they must also report a weighted average, based on unit sales. Texas also has requested that manufacturers submit pricing data for eligible pharmacies in Texas only. Last year, at IIR’s MDRP Summit, a Texas representative announced that this reporting requirement would most likely be going away and just this month, the Texas Health & Human Services Commission (“TX HHSC”) Vendor Drug Program announced that they will propose the following changes to the reporting requirement:

- If a manufacturer wants to place its products on the Texas Code Index, they would be required to submit AMP, AWP, Direct Price to LTC Pharmacy, Direct Price to Pharmacy, and Price to Wholesaler/Distributor

- No future prices would need to be submitted unless requested from the TX HHSC and at that point, the manufacturer would have 10 days to provide the information

Remember, these changes are proposed and as of today, pharmaceutical manufacturers should still be reporting to Texas the required data outlined above.

Also of note is New York’s EPIC and Pennsylvania’s PACE Programs. They also require quarterly submissions that contain the same information as your DDR submission.

And speaking of states, MDRP is the perfect time to bring your documentation to resolve any outstanding disputes with representatives from the following states who will be attending: Alabama, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Montana, Nevada, North Carolina, Oregon, Utah, Virginia, Wisconsin, and Wyoming.

If you need more information on the various state requirements or assistance in handling a dispute, please feel free to reach out to me. Katie Lapins, Government Pricing Specialists, LLC, 303.993.6466, K.Lapins@GP-Specialists.com. I look forward to seeing you in Chicago at MDRP!

Katie Lapins

Katie Lapins has worked in the pharmaceutical and medical device industries in the areas of commercial and government contracting, compliance, finance and sales operations for 15 years. As a consultant, Katie’s areas of primary focus are government programs, corporate compliance and commercial operations. Within these areas, she has developed policies and procedures, assisted manufacturers with voluntary disclosures/restatements, led audits and assessments, calculated and submitted statutory pricing requirements (AMP, BP, ASP, Non-FAMP, PHS and TRICARE), processed Medicaid/ SPAP/ Supplemental invoices, validated PHS eligibility, handled Class of Trade projects with over 100K entities, and created training for onsite and web-based instruction for 2 – 200 employees. Katie’s experience within the industry includes government contract administration, pricing analysis, commercial operations, specialty pharmaceutical distribution agreements and commercial contract management.

Thursday, August 13, 2015

As you probably already heard, the highly anticipated AMP Final Rule has been submitted to OMB and the proposed rule is expected to be released at the end of August—Just in time for IIR's MDRP Summit!

MDRP 2015 is a platform to impact the Final Rule during the comment period and directly influence its outcome. Connect with 550+ MDRP executives and 100+ industry experts to dissect the proposed rule and submit feedback to CMS. Get a head start on your compliance operations for the impending Final Rule implementation.

How will MDRP facilitate the industry comments to CMS? Click here to see all the AMP related content we have throughout all three days of the conference. For full session and speaker details, download the brochure.

If you are planning on joining us in Chicago on September 30-October 2, 2015, now is the time to register! Not only is this Friday the last chance for you to save on registration, but the Chicago Marriott Downtown Magnificent Mile hotel is also nearly sold out! Reserve you hotel room here.

PLUS! Get 340B Updates directly from HRSA on October 1st during the main conference from Michelle Herzog, Deputy Director, Office of Pharmacy Affairs, HRSA, and during the full-day 340B Mega Guidance Compliance pre-conference summit on September 30th.

This Friday, August 14th is your last chance to SAVE up to $300 off the standard rate. Be sure to use priority code: XP2058BLOG. After Friday, rates will go up! Register here.

Thursday, August 6, 2015

The long-awaited “Mega” Rule related to the 340B Program may soon be released. In the past, the 340B Program has been primarily administered without formal regulations, establishing the rules that govern the 340B program primarily through policy releases, informal guidance, and FAQs. However, when the Patient Protection and Affordable Care Act (ACA) / Health Care and Education Reconciliation Act (HCERA) was passed, Health Resources and Services Administration (HRSA) was mandated to specifically address certain topics that require clarity or further guidance.

Before any rule can be published, it is submitted to the Office of Management and Budget (OMB) who must first clear it which normally takes about 90 days. The “Mega” Rule was submitted in June, making its release in September likely. Although rules can be held up at OMB for months, or longer, most experts do not expect that to happen with this one. So what are a few of the “hot topics” in the 340B Program?Orphan Drug Rule
You may remember that HRSA had previously submitted a Proposed Rule regarding Orphan Drugs to the OMB but withdrew it in November 2014 after a court ruled that HRSA had overstepped its authority 1. This rule was later reissued as “interpretive,” PhRMA has challenged it (again), and we still are waiting for a ruling from the courts. This case has been important as the court’s decision implies that an agency must have the specific authority from Congress to issue rules that change those items established through statute. However, this interpretive guidance could ultimately be the foundation for enforcement against manufacturers, creating a conundrum for them since that would mean HRSA’s interpretation would have the same impact as a rule. The next court decision in this matter could clarify this situation, making the procedures of HRSA as important as the content in this case.The “Mega” Rule
Earlier this year, HRSA issued a Proposed Rule regarding the calculation of 340B ceiling prices and CMPs and public comments are due within 60 days (August 17, 2015). So what’s left for the 340B Program and why is there still a pending “Mega” Rule? Many people believe it will contain components related to the 340B Program that remain vague and require clarity for all stakeholders, including:

Many of these topics are related to the overall intent, and potentially unintended outcomes, of the program. In recent years, the growth of the program has been rapid for a few reasons; many hospitals have acquired other facilities that are 340B eligible and also, as of March 2010, covered entities can use multiple contract pharmacies. As this growth has occurred, questions have arisen regarding the intent of the program and the profits of various stakeholders. Congress has issued letters to some of the stakeholders and held special hearings, and the General Accounting Office and Office of the Inspector General have also raised concerns about the program’s integrity. Even without diversion or duplicate discounts, the ability to purchase drugs at deeply discounted prices and administer them to patients who may have health insurance provides a large “spread” or profit to the covered entity. The retail outlets serving as contract pharmacies also have the potential to see significant revenue from this role, beyond what was originally imagined. HRSA’s mission is to, “improve[e] access to health care by strengthening the health care workforce, building healthy communities and achieving health equity.”2. At issue to many is if the way the 340B Program is currently functioning follows the intent of the program.

The “Mega” Rule will be issued as a Proposed Rule, allowing 60 days for comments from stakeholders. It’s important that manufacturers read the entire document and involve the appropriate personnel and departments to determine the potential impact on their own company’s operations and ultimately, their bottom line. This will include not only the legal and policy areas but also the procedural and administrative ones, as well.

Clearly, the 340B Program continues to be one of great change and important considerations must be weighed by all of its stakeholders. The 20th MDRP Summit by IIR is filled with 340B-related topics and includes a full day workshop on this important topic. Hear from colleagues, attorneys, and government officials who have expertise in the 340B Program to find out about the implications for your organization of these impending changes. Download the agenda to see a complete topic list.

Katie Lapins

Katie Lapins has worked in the pharmaceutical and medical device industries in the areas of commercial and government contracting, compliance, finance and sales operations for 15 years. As a consultant, Katie’s areas of primary focus are government programs, corporate compliance and commercial operations. Within these areas, she has developed policies and procedures, assisted manufacturers with voluntary disclosures/restatements, led audits and assessments, calculated and submitted statutory pricing requirements (AMP, BP, ASP, Non-FAMP, PHS and TRICARE), processed Medicaid/ SPAP/ Supplemental invoices, validated PHS eligibility, handled Class of Trade projects with over 100K entities, and created training for onsite and web-based instruction for 2 – 200 employees. Katie’s experience within the industry includes government contract administration, pricing analysis, commercial operations, specialty pharmaceutical distribution agreements and commercial contract management.

1 - In brief, HRSA’s Orphan Drug Proposed Rule said that the free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals purchasing orphan-designated drugs are entitled to purchase those drugs at the 340B ceiling price when they are used for an indication other than the orphan indication.2 - http://www.hrsa.gov/about/index.html